After the FED's announcement that interest rates would not be cut soon in the first quarter of 2024, the US stock market reacted negatively. At the same time, Bitcoin price also recorded a slight decrease. This effect is likely to last into this new month.
The following are the latest records and assessments on correlation fluctuations between US stocks and Bitcoin prices, from BeInCrypto.
Bitcoin corrects along with S&P500 after FED statement
After Fed Chairman Powell said that a rate cut in March was unlikely until the 2% inflation target was reached. Then in just 5 minutes, the S&P500 dropped more than 50 points, blowing away 500 billion in market capitalization. This is recorded as the worst trading session for the S&P500 since September 2023.
While in December, the market was still optimistic about the possibility of the FED cutting interest rates soon in the first quarter.
See more: Fed announced to keep interest rates unchanged, warned not to lower interest rates until inflation reaches 2%
Bitcoin and S&P500 price fluctuations.
Looking at the fluctuations of Bitcoin and S&P500 side by side, from November last year to January this year, both were in a strong uptrend. Bitcoin had its own internal impacts after the approval of the Bitcoin ETF, so it fell sharply while the S&P500 maintained its upward momentum. But up to now, both have given the same reaction at the same time.
Money is flowing out of the stock market as expectations of the FED cutting interest rates soon have weakened, predicting a similar negative impact could affect Bitcoin prices. Although the BTC price closed the monthly candle in green +1%, it is a Doji model showing the balance between the buying and selling sides after a strong upward momentum for many consecutive months.
The most significant positive signal in the recent FED speech is that there are no longer any words suggesting the possibility of continued tightening.
Bitcoin's selling pressure is expressed through Cumulative Volume Delta (CVD)
Cumulative Volume Delta (CVD) differs from other volume indicators in that it does not only calculate the total volume but distinguishes buying volume and selling volume by evaluating fluctuations over a certain period of time. When CVD is negative and falls sharply, it shows that selling pressure is sustained and gradually strengthening.
Data from Kaiko records that the CVD of the BTC/USDT pair has continuously been negative and decreased sharply in January, and so far there is no sign of increasing again. Kaiko said that most of the sales involving GBTC were conducted through Coinbase Prime – a leading brokerage firm that uses various liquidity sources, including OTC, to execute trades. Kaiko also saw significant BTC selling through USDT pairs on Coinbase, Bybit, Binance, Kraken, and OKX.
Technically, BTC price is at the neutral level of the high price range. Hesitancy can quickly disappear and confirm a new trend when negative news appears. The FED's suggestion that it will not cut interest rates soon and the US stock market's sharp decline could be the first notable negative news of this February.
Source: Beincrypto
